Investment Loan

Combining a wide range of accepted managed funds, platforms and Australian equities with class-leading features, our investment loan offers the flexibility to help meet investor needs and potentially accelerate their investment returns.

Established as Colonial Geared Investments in 1996 and backed by the Commonwealth Bank of Australia, the CommSec Adviser Services Investment Loan has built a strong reputation on features and value for money.

Fees & Charges

Fixed Interest Rate Loans: An early repayment adjustment may be payable after allowing for a refund of any interest paid in advance. The fee is calculated using the criteria in the Investment Lending Terms and Conditions booklet.

Dishonour Fees

Any cheque or direct debit rejection will incur a fee of $30. This fee will be charged to the loan account at the time of the rejection or on termination of the loan facility.

Paper Statement Fee

We make electronic statements available free of charge. A $1.95 per statement fee applies if you request to receive paper statements or we send you paper statements because you have not provided a valid email address to us.

Personal Property Securities Register (PPSR) Registration Fee

A government fee may be payable to register or amend the registration of the Security Interest on the PPSR.

Trust Investigation Fee

A minimum fee of approximately $200 will apply for Trust Deed Investigation if a Trust is the borrower or security provider to the loan and the Trust’s total loan exposure to the Bank will be greater than $500,000.

The fee will be charged to the loan, unless there is insufficient collateral, in which case we will debit the nominated bank account.

About the CommSec Adviser Services Investment Loan

Who is it designed for?

Advisers and Planners wanting to offer their clients a flexible investment loan that:

Unlocks the equity in their existing shareholdings so they can build a larger portfolio and multiply the opportunity for capital gains;

Allows them to diversify into a greater number of assets;

Enables them to quickly take advantage of market opportunities;

Has the potential to generate higher capital gains over the medium to long term;

Can increase an income stream from greater exposure to dividends and capital gains; and

Please consider the Investment Loan Product Disclosure Statement before making any decisions about whether to acquire the financial product. Only investors who fully understand the risks associated with gearing into investments should apply.

^Taxation outcomes can vary according to individual circumstances and are subject to changes in legislation.

Accepted Securities

The Accepted Securities Lists (ASL) below shows the percentage of the value of a share and managed fund that we will lend you if it is held as security against your Investment Loan. This percentage is referred to as the Borrowing Limit.

Please consider the Investment Loan Product Disclosure Statement before making any decisions about whether to acquire the financial product. Only investors who fully understand the risks associated with gearing into investments should apply.

Borrowing & Risk

Risk Management

Borrowing to invest can multiply your investment returns in a rising market. However, it can also multiply your investment losses if the market declines and your investments perform poorly. Some of the risks of using an investment loan include:

Returns will be magnified, for both positive and negative returns;

Interest rates may rise, increasing interest costs;

Borrowing limits may be reduced, increasing the potential for a Margin Call;

Margin Calls may require the sale of assets at unfavourable prices;

Taxation legislation may change.

Managing the risks of an investment loan

There are a number of things you can do to reduce the risks associated with an investment loan. They include:

If your account is in buffer, use the time to be proactive and avoid a margin call

Regularly monitor your loan position and be prepared to take action quickly

Your financial adviser can help you plan the best way for you to manage margin calls.

Control your LSR before triggering a margin call

It is important to regularly monitor the status of your investment loan. A downturn in the market or a reduction in the borrowing limit of a listed security or fund securing your investment loan may move your Current LSR closer to your Base and Margin Call LSRs.

Investors should always aim to keep their Current LSR below the Base LSR – the maximum permitted level of gearing. Once the Current LSR moves above the Base LSR, the investment loan is in the ‘Buffer’. If the Current LSR reaches and exceeds the Margin Call LSR the investor will be in Margin Call and will be required to bring the Current LSR back below the Base LSR. This is usually done by reducing the loan balance and/or adding approved securities to the portfolio.

Please consider the Investment Loan Product Disclosure Statement before making any decisions about whether to acquire the financial product. Only investors who fully understand the risks associated with gearing into investments should apply.

Forms

Incorporation by Reference Documents

1. Accepted ASX Listed Securities List*

Contains all accepted exchange traded equities and ETFs and their borrowing limit.Updated: 19/03/2018

Use this form to identify your client as a wholesale client. This form and the required supporting evidence must be submitted with the application form for commission to be paid on the Accelerator Cash Account.

This information was prepared by CommSec Adviser Services, a brand of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945, administered by its wholly owned but non-guaranteed subsidiary Commonwealth Securities Limited ABN 80 067 254 399 AFSL 238614, a Participant of the ASX Group and Chi-X Australia. Only investors who fully understand the risks associated with gearing into investments should apply. Applications are subject to credit approval. Fees and charges apply. Please consider the Product Disclosure Statement (PDS) and Terms and Conditions, issued by the Bank before making any decision about the product.

Resources

'How-to Videos'

Account Origination

'Smart' PDF Application Form

Open trading, cash and investment loan accounts, or any combination of the three, using our 'Smart' PDF application form.

Allows you to test a combination of cash and security transactions and determine their effect on the current position of an investment loan. Also assists with the resolution of margin calls by providing the amounts required for each possible transaction option to clear the margin call.

Have you ever wondered what investment returns are required before a geared investment strategy will outperform and non-geared one? We’ve taken the guess work out and have developed a simple calculator that will determine the minimum capital growth rate or income yield that will result in a geared investment strategy outperforming the non-geared equivalent.

Our Investment Loan Gearing Simulator is designed to allow advisors to quickly and easily demonstrate the advantages of utilising a geared investment strategy over a non-geared investment strategy. It outputs the expected outcome of each strategy over the specified term, offers many special features and also allows for regular gearing plans.

The Debt Strategy Simulator allows advisers to compare the wealth outcomes of traditional debt elimination strategies to a debt optimisation (debt recycling) strategy. The simulator requires the input of various assumptions and provides the outcomes of these strategies over a 30 year period using graphs and tables which can be printed or copied and pasted into documents such as SOAs and emails.

Borrowing to invest (often referred to as gearing) offers the potential to grow wealth at a faster rate when compared to not gearing. Using an Investment Loan your clients can invest into listed securities or managed funds and potentially accelerate their returns.

Even with the best intentions and a good income, building wealth can be a slow process - especially if you want to enjoy a little bit of life at the same time. But with some savings, a budget and the right financial advice, you can create an investment portfolio and reach your goals sooner.

Owning a business can be a challenging yet rewarding experience. Aside from the day-to-day issues of managing the business, it's also important to plan for the future and invest any profits wisely. Should you pay off debt, expand the business, or diversify into other income producing assets? With the right advice you can develop a strategy that will maximise your wealth and generate additional income.

For many Australians the idea of borrowing money to create a larger investment portfolio seems out of reach. With income allocated to rent or a mortgage, living expenses and the occasional holiday, finding the extra cash to meet interest costs seems almost impossible. But with the right financial advice many Australians can build a larger investment portfolio, by using investment income to meet interest costs.

Most successful investors would agree that the hardest part was getting started. Having a goal in mind, setting a budget and picking what to invest in are all parts of the typical plan ... but is it possible to start investing sooner rather than later and achieve your goals even earlier?

This strategy involves an investor combining a single equity contribution with a borrowed amount for investment. The total amount may be invested in managed funds, ASX listed securities or a combination of the two. This strategy puts your money to work immediately and provides full exposure to movements in share and unit prices. The flexibility of the facility also allows you to increase or decrease your investment exposure at any time.

Strategy – Regular gearing

This strategy combines the power of an investment loan with all the benefits of a disciplined savings plan. A regular gearing strategy automatically combines your monthly cash contributions with a borrowed amount for investment. Regular gearing is suitable to investors who don’t have a large amount to invest, wish to use a more conservative entry strategy or want to adopt a ‘dollar cost averaging’ strategy.

Guide to Investment Services

Learn about our full range of products and services to help determine which one is right for you when investing on behalf of your clients.

This information was prepared by CommSec Adviser Services, a brand of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945, administered by its wholly owned but non-guaranteed subsidiary Commonwealth Securities Limited ABN 80 067 254 399 AFSL 238614, a Participant of the ASX Group and Chi-X Australia. Only investors who fully understand the risks associated with gearing into investments should apply. Applications are subject to credit approval. Fees and charges apply. Please consider the Product Disclosure Statement (PDS) and Terms and Conditions, issued by the Bank before making any decision about the product.

FAQs

What types of Investment Loans do you offer?

We offer two types of Investment Loans with slightly different features to suit different investor needs:

one with a 10% buffer and features aimed at investors predominantly investing into Managed Funds; and

one with a 5% buffer and features aimed at investors predominantly investing into direct listed equities.

We offer two types of Investment Loan with slightly different features to suit different investor needs:

one with a 10% buffer and features aimed at investors predominantly investing into Managed Funds; and

one with a 5% buffer and features at investors predominantly investing into direct listed equities.

How much can my clients borrow?

The maximum amount your clients can borrow depends on:

How much money they have to invest or the value of the assets they provide as security.

Which shares or managed funds your clients invest in, as we lend different amount for different types of investments.

The Borrowing Limit for each accepted security is set out in our Accepted Securities List. Borrowing Limits, which we determine, may change from time to time at our discretion.

What is a Margin Call?

A Margin Call occurs when:

Your client’s current LVR exceeds the Margin Call LVR; or

Your client’s current LVR exceeds the Maximum Gearing Ratio

A Margin Call can occur when:

The loan value increases due to withdrawals or interest capitalisation;

The market value of your client’s portfolio falls;

We reduce the LVR of an investment securing your client’s investment loan; or

We reduce the Buffer amount

What actions does CommSec Adviser Services take in the event of a Margin Call?

We will take reasonable steps to notify you and your affected client(s) by SMS, email or phone. You must ensure you are contactable at all times in the event of a Margin Call and keep us informed of any changes to your contact details and your clients'.

Your clients' gearing level must be adjusted within the timeframes stipulated in the Terms & Conditions so that it is below the lower of:

The Base LVR; and

The Maximum Gearing Ratio

How do my clients resolve a Margin Call?

If a Margin Call is triggered on your client’s account, the following resolutions are available:

Reduce the loan balance by depositing money into the investment loan;

Add accepted shares or managed funds to increase portfolio value; or

Sell sufficient amount in the portfolio to reduce loan balance and gearing level

What are the risks?

All investments are subject to risk. This means that your client may lose money on their investments or fail to meet their financial objectives.

The key risks of an Investment Loan include:

Adverse market conditions may result in portfolio value being reduced and subsequently gearing level may increase, triggering a Margin Call.

We may reduce or remove the LVR applied to some or all of your clients' investments, or their portfolio as a whole at any time, which may result in a Margin Call.

The variable interest rate may increase resulting in higher interest costs, which may exceed the portfolio’s return.

Margin Calls may require investments to be sold by you or us quickly at unfavourable prices and may trigger unwanted capital gains or losses if your client is unprepared.

Tax legislations or marginal tax rates may change and have an adverse impact on the client’s tax position.

The loss of any assets (including property) if they have been mortgaged as security or to provide security to the Investment Loan.

Default events or enforcement events (as defined in the Terms & Conditions) occurring. The consequences of such an event occurring include all amounts owing becoming immediately payable. Default events include a materially-adverse change to your client’s financial position, or to the financial position of any Guarantor or Mortgagor; and/or where all the All Ordinaries Index falls by 10% or more in any one trading day or by 20% or more over any three consecutive trading days.

Diversification may help to smooth out volatility, making a margin call less likely. When you spread your portfolio across different companies and sectors, a fall in the value of one investment may be offset by a rise in the value of another.

Ensure you have sufficient cash flow - Work out your interest payments and other costs in advance. Remember that interest rates may rise or you may be required to meet a margin call within short timeframes.

Monitor your investments: Regularly monitor the market and your margin loan, and be prepared to adjust your strategy when the market outlook is less positive. Your account information is available anytime online. If your account is in buffer, use the time to be proactive and avoid a margin call

We will process the request within approximately 48 to 72 hours of receipt.

This information was prepared by CommSec Adviser Services, a brand of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945, administered by its wholly owned but non-guaranteed subsidiary Commonwealth Securities Limited ABN 80 067 254 399 AFSL 238614, a Participant of the ASX Group and Chi-X Australia. Only investors who fully understand the risks associated with gearing into investments should apply. Applications are subject to credit approval. Fees and charges apply. Please consider the Product Disclosure Statement (PDS) and Terms and Conditions, issued by the Bank before making any decision about the product.

This website contains general information for advisers only and does not take into account any individual objectives, financial situation or needs. Investors should read the relevant disclosure document and seek professional advice before making any decision based on this information. This website has been produced by Australian Investment Exchange Limited (AUSIEX) ABN 71 076 515 930 AFSL 241400 under the brand CommSec Adviser Services. CommSec Adviser Services (CAS) is a brand of Commonwealth Bank of Australia (the Bank) ABN 48 123 123 124 AFSL and Australian credit licence 234945.

Portfolio Service is offered by AUSIEX under the brand CAS and Colonial First State Custom Solutions (CFSCS), which is the registered business name of Avanteos Investments Limited (AIL) ABN 20 096 259 979 AFSL 245531. CFSCS and AUSIEX are wholly owned but non-guaranteed subsidiaries of the Bank. Portfolio Service provides access to the Trading Account, Accelerator Cash Account (ACA) and Managed Investments Account. The Managed Investments Account is an investor directed portfolio service (IDPS) operated by CFSCS. Share Trading and Investment Management services are provided by AUSIEX, a participant of the ASX Group and Chi-X Australia. The ACA and Term Deposit are deposit products issued by the Bank and administered by AUSIEX, under the brand CAS. The Investment Loan and CALIA+ lending products are available under the CAS brand are provided by the Bank and administered by the Bank’s wholly owned but non-guaranteed subsidiary Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814, a participant of the ASX Group and Chi-X Australia.

Acknowledgement

The validation and interactive prompts throughout the online application help ensure all information is complete and correct before application submission. The result is faster processing due to less rework because of missing or incorrect information as compared to our pdf applications.

Online validation for requests means you get a response on the likely success of the transfer instantly compared to a paper form. The result is faster processing due to less rework due to registration details not matching.